A business* is required to file an annual report with the Secretary of State’s office on or before the first day of the fourth month following the close of the business’ fiscal year. This report contains basic information about the business, including the business’ office address, registered agent and registered office, and officers/directors/managers; it does not contain any financial information.

A preprinted annual report form is generated by Tennessee’s Secretary of State during, or in the month following, the FYC (Fiscal Year Closing) month of record, and is mailed to the principal office mailing address of record. The form is preprinted with current information of record for the business.

The annual report fee for corporations is $20; however, there is an additional $20 charge if you change the registered agent at that time. For LLCs, the state requires a minimum fee of $300 ($50 per member with a $3,000 maximum charge).
If you need help, we can file the annual report for you. Our fee is only $15. To order our service, please click on the following link:

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Business Information & Rankings

• Bloomberg Wealth Manager ranked Tennessee 3rd in Wealth Friendliness. (2004)
• Tennessee ranked 15th in the Tax Foundation’s State Business Tax Climate Index. (2004)
• Tennessee ranked 4th in charitable giving on the Internal Revenue Service’s Generosity Report for 2003 (reported in 2005)
• Tennessee ranks 4th in the nation in automotive manufacturing.

Cost of living

Crime Rate

Tennessee has the 44th lowest overall crime ranking in the U.S. (FBI, 2004)

Fees & Taxes

Business Inventory Tax
Exempt.

Corporate Income Tax
Tennessee’s corporate tax structure consists of a flat rate of 6.0% on all corporate income.

Personal Income Tax
Tennessee’s personal income tax system consists of a flat 6% rate on only dividend and interest income. All other personal income is not subject to state taxation.

Personal Property Tax
Tennessee collects property taxes at the local level. Intangible personal property is assessed on the shares of stock of stockholders of any loan company, investment company, insurance company or for-profit cemetery companies.

State Sales and Use Tax
Base Rate: 7.0%
Machinery Rate: none

There is an exemption for industrial machinery.

Unemployment Insurance
Tennessee’s new employers’ rate is 2.7% for 3 years.

Once you have formed a business in Tennessee, what is the next step towards making your business operational? A business license in Tennessee is one of the important requirements though not every Tennessee business requires a license. At the same time, there are several types of businesses that may require one or more licenses or permits. Different types of licenses and permits are issued by different state agencies and some of the important issuing authorities include:

• The Department of Agriculture’s Consumer and Industry Services
• The Alcoholic Beverage Commission
• The Department of Health (DOH)
• The Department of Environment & Conservation

What is the process for issuance of a business license?

Step-by-Step Guide to a Business License in Tennessee

Here is a step-by-step approach towards acquiring a business license in the state of Tennessee:

Step#1: The Industry or Business Type

How would you know what type of business or professional license is required to operate in Tennessee? The type of industry or the activities of a business entity helps in identifying the type of business license required.

It is important to note that you may have to apply for a standard business license in the state if your business is located in Tennessee and is subject to business tax, where your taxable sales are $10,000 or above. Depending on where your business is located you will be required to apply to the office of the County Clerk or City Official.

The license can also be obtained from various state agencies directly depending on the type of business you have. Let’s take a look at some examples to understand this better:

Hotels

These kinds of business licenses are issued to some business types like food service establishments and hotels while permits are issued to others like bed and breakfast.

• Issued by: Tennessee Division of Environmental Health
• Example: If you were to establish a “food service establishment” then this will include any establishment, permanent or temporary, place or location, where food is being prepared and served to the public and consists of foods, vegetables, and even alcoholic beverages. Requirements of a food service establishment
  A Tennessee company license will be issued only after proper inspection procedures have been completed and approved.
• Fees: The fee for a license or permit for a food service establishment like a restaurant will vary according to the seating capacity and have been established by the statutes of the state. An establishment with a seating capacity of 50 or less will have to pay a fee of $210 per year while the ones with more than 51 seats will pay $360 per year.
• Renewal of Business License: The license or permit year begins on July 1st and it will expire on June 30, the following year.

Liquor Licensing

• License Issued by: Tennessee Alcoholic Beverage Commission issued Liquor-By-the-Drink (LBD) licenses also known as “On-Premise Consumption” licenses. The business license is normally issued to hotels, restaurants, private clubs and other similar establishments, which are eligible under the Tennessee law. The LBD licenses are issued for the following:
  – Restaurant
  – Caterer
  – Special Occasion
  – Club
  – Hotel Motel
  – Limited Service Restaurant
  – Wine Only Restaurant
• You can apply for this license through the Regulatory Licensing and Permitting System (RLPS)
• Apart from this, several other types of business licenses in Tennessee are also issued by the Tennessee Alcoholic Beverage Commission for the following:
  – Winery
  – Wholesaler
  – Retail food store wine license
  – Distiller
  – Farm Winery
  – Wine making on premises

Step#2: Licenses issued by City/County

If your business or industry type doesn’t fall under a state-wide license then you will have to check with the local city or county office. A Tennessee company license can also be issued by local counties or cities in which the business is located.

If your business is situated in any county like Shelby County then you will require either of the following types of Tennessee company license:

Standard License: You will require a “Standard Business License” if your business has gross above $10,000 annually, which is not exempt. Application Form
Minimal Activity Business License: This is a type of license that is issued to businesses that have a gross of more than $3,000 but less than $10,000 annually. Application Form

Step#3: Issuance of a Business License

How is a business license in Tennessee issued? You have to identify the following to complete the process:

1. The type of business or industry
2. Do you need a license or a permit?
3. Will it be issued by the state or the city or county?

Once you have identified the above, all you need to do is either download the application online or contact the concerned state department or city of clerk office.

It is important to note that a business license or permit will have to be renewed annually unless specific dates have been mentioned, to keep the business operational.

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According to a report by the Brookings Institution, the state of Tennessee is ranked #1 among all U.S. states as far as advanced industry job growth is concerned and this growth has been steady since 2013. The advanced industry jobs have been growing at a rate of 4.6 percent annually and this is more so because this industry has witnessed a higher number of incorporation in Tennessee. Today, the advanced industries employ approximately 249,617 full-time workers with an additional 199,690 indirect jobs. The revenue generated by this industry is $39.7 billion and this accounts for 14.3 percent of the economic output of the Volunteer State.

What makes Tennessee a great business destination? High Expectations, Pro-Business Regulatory Environment, and Low Debt!

Why Choose Tennessee for Incorporation?

A stable and evolving business-friendly environment is one of the reasons behind the rise in company incorporation in Tennessee. This is not all; the state is ranked #2 for being the lowest state and local taxes paid per capita (fiscal year 2012) and has achieved the “Triple A” rating status from all major rating services.

Now let’s take a look at some of the salient benefits that are responsible for fuelling growth of small businesses:

• Tennessee Opportunity Zones: The Tennessee Opportunity Zone Program has been designed to ensure flow in of long-term capital especially in low-income communities. If you set up company in Tennessee and in any of the qualified opportunity tracts then you can benefit from tax credits and other incentives. There are 176 census tracts in Tennessee that offer the following advantages:
  – Retail, commercial and tourism development opportunities
  – Business development
  – Brownfield redevelopment opportunities
  – Low-income housing development opportunities
  – Community and rural development initiatives
  – Proximity to technology transfer offices, entrepreneur centers, and universities
  List of Opportunity Zones
• Financial Programs: There are several financial programs that you can benefit from post company incorporation in Tennessee. These financial incentives are being made available by the Tennessee Department of Economic & Community Development (TNECD) and the most popular programs for businesses are:
  – Manufacturing Sales Tax Exemption
  – State sales tax credit for qualified personal property
  – Sales tax exemption on Warehouse
  – State sales tax exemption for industrial machinery
  – Tax exemption sales of international telecommunication and interstate telecommunication services
  – Enhanced Job Tax Credit program

How do you incorporate in Tennessee?

What is the process of incorporation in Tennessee? What type of documentation is required? These are some of the common questions that you will be confronted with if you are planning to start a new business in the state. The following steps will help you understand the entire process:

Business Type

The first step towards incorporation in Tennessee is choosing the type of business you want to form. You can choose to form an LLC or a Corporation. The type of business entity you want to form can be either a domestic or a foreign entity. The forms and fee will be different for each type of entity.

Business Entity Name

One of the most important steps towards incorporation in Tennessee is naming your business entity. You have to start by identifying, searching, reserving, or registering the business entity name. There are 3 steps towards business name formation and they are:

1. Naming Requirements: A business name pursuant to T.C.A. § 48-249-106 and § 48-249-903 for domestic and foreign LLC and TN Code § 48-14-101 for business corporation should contain words like “corporation”, “incorporated”, “limited liability company” or abbreviations like “corp.”, “inc.”, “ltd.”, “L.L.C.” or similar abbreviation.
2. Business name search: You need to search for a business name that is not in use currently. You can conduct a name search here.
3. Name Reservation: Once you have identified a business entity name, and if the name is available then you can reserve the name pursuant to T.C.A. § 48-249-107 for an LLC and TN Code § 48-14-102 for a business corporation. Reservation of business name for incorporation in Tennessee will be effective for a period of 4 months.
4. A foreign business entity will have to register their business name pursuant to T.C.A. § 48-249-108 for LLC and TN Code § 48-14-103 for profit corporations.

Choose a Registered Agent

Whether you form a corporation or an LLC business entity, in order to transact business in the state of Tennessee, you will have to maintain a registered agent pursuant to T.C.A. § 48-249-109 for LLC and TN Code § 48-15-101 for Business Corporations.

We are one of the respected registered agents in Tennessee and will be responsible towards initiating incorporation in Tennessee through processing of your “Articles of Organization”, and “Charter” for domestic entities and “Certificate of Authority” for foreign business entities.

Charter and Certificate of Authority

You will be required to submit “Charter” if your business is a domestic corporation and a “Certificate of Authority” if it is a foreign business entity. In order to streamline the process of incorporation in Tennessee, we can file documents on your behalf online or through an expedited process.

Date Stamped Copies

As a part of the process of company incorporation in Tennessee, we will ensure, you receive date-stamped and filed copies that verifies the state has filed as well as formed your corporation.

Costs and Fees associated with Tennessee Incorporation

What would it cost to set up company in Tennessee? Check Fees here!

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There are a variety of start-up companies in Tennessee that you can form right from for profit corporations to limited liability companies (LLC), general partnerships (GP), limited partnerships (LP), limited liability partnerships (LLP), and much more. This is possible due to the good business climate and solid infrastructure. As a matter of fact, the state has also witnessed 42,914 new entity filings over the last twelve months with 237,921 businesses filing annual reports. The key business indicators suggest sustained economic growth in the volunteer state. The business climate however is driven by several aspects including various programs that provide incentives and salient benefits to all types of businesses being formed in the state.

Business Growth Incentive for New Businesses

Should you register a new company in Tennessee? The state of Tennessee witnessed 9,837 new entity filings (initial filings) by the 4th quarter of 2018, which is a strong 10.3% increase as compared to the same quarter last year. The number of start-up e quarter last year. The number of Tennessee includes 1,301 domestic “For-Profit” Corporations, 6,139 domestic LLC and 1,606 foreign business entities in the 4th quarter. There are a few advantages that play a key role in new entity formation and some of them are:

Advantage#1: The benefits of Incorporation or LLC formation

Corporation

• “Low or No” Taxes: One of the key advantages that you can enjoy if you register a new company in Tennessee are low or no taxes. These tax benefits are provided by a variety of state entities including the Tennessee Department of Economic Development and Tennessee Valley Authority among others. The Low tax or no tax translates into better bottom line for new businesses in the state. Some of them are:
  – No personal income tax
  – No sales tax on raw material
  – No sales tax on pollution control equipment
  – No state sales tax on manufacturing equipment
  – Reduced sales tax on energy fuel used by manufacturers
  – 1% tax credit on capital equipment
• Pass through Taxation: If you register a new company in Tennessee as an S corporation then the corporation or firm will not pay any income tax. Instead, the income or loss of the corporation will be passed on to the stockholders.
• Independent Life: One of the salient advantages of an S Corporation in Tennessee is that it enjoys an independent life. The death or incapacitation of a stockholder will not disturb operations of the business.

LLC

• Flexible Profit Distribution: A start-up company in Tennessee which is an LLC has the benefit of being able to select different ways of distribution of profits unlike a partnership where the distribution is 50-50.
• Tennessee Economic Development Incentive Programs: A start-up company in Tennessee, entrepreneurs, and small businesses require different forms of assistance to ensure sustainability of their start-ups and short or long-term growth. Hence, programs have been created to ensure businesses can achieve their short-term and long-term goals and these include:
  – FastTrack Infrastructure Program
  – Job Tax Credit
  – FastTrack Economic Development Fund
  – Enhanced Job Tax Credit
  – FastTrack Job Training Assistance Program
  – Industrial Machinery Tax Credit
  – Sales Tax Exemption program
• Limited Liability: As an owner of a Tennessee LLC, you will be able to enjoy limited liability protection quite similar to what a corporation enjoys.

Advantage#2: Top Business Incentive Programs in Tennessee

Once you register a new company in Tennessee, there are several business incentives and programs that your company can benefit from. Let’s take a look at some of the top programs:

• Valley Incentive Programs: The “Valley Incentive Programs” contains several different sub programs that provide economic incentives of varying degree. If you register a new business in Tennessee, you can benefit from the programs, which provide the following:
• Investment Credit: The Investment Credit program is an economic development incentive program that is being offered jointly by TVA and various local power companies. This is a performance-based program that rewards business entities that are establishing as new or star-ups or existing businesses planning expanded operations. The awards as a part of the program are applied as a credit to the monthly power bills of businesses. A business entity can expect as much as 10-20 percent savings annually and this is over a 5 or 10 year period.
• Loan Funds: This is another program targeted at a start-up company in Tennessee. Financing is made to newly established businesses in the state and the objective of this program is to stimulate job growth as well as leverage capital investment. The maximum loan amount available to businesses is $3 million and loan terms can vary from 5 to 20 years.

Are there any Disadvantages of Incorporating in Tennessee?

As a start-up company in Tennessee, you will be able to enjoy several benefits in the form of tax credits, grants, loans, and Opportunity zone programs, assistance in Infrastructure and Facilities Improvement, and much more. So, the big question is – are there any disadvantages? In reality, there are no disadvantages as such except the ones that are specific to the type of business you register like an LLC has a limited life and can get dissolved if a member dies. Similarly, incorporation can lead to higher overall taxes and this is where you can find relief in the form of the tax credit programs.

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